Li & Fung LTD. has scored a six-figure judgment against Contemporary Streetwear LLC, a New York-based apparel supplier, which failed to pay the sourcing giant for orders it made for the company from 2009 to 2011.
This story first appeared in the June 7, 2013 issue of WWD. Subscribe Today.
On Thursday, New York Southern District Magistrate Judge Debra Freeman awarded the Hong Kong-based firm $1.7 million in compensatory damages. This does not include a pre-judgment interest rate of 9 percent a year that will be calculated by the court.
In the lawsuit, which was filed in New York federal court in 2011, Li & Fung claimed that Contemporary Streetwear “refused to pay” three years of invoices and that it “indicated no intent to pay” the invoices that were “outstanding but have not yet become due.”
Initially, Li & Fung was looking for $5.1 million in damages, but it also cited in its complaint a host of unpaid orders that it delivered from October 2010 to February 2011, which amounted to $1.7 million.
In the complaint, Li & Fung referenced a deal meant to “induce” it to remain Contemporary Streetwear’s primary buying agent. According to court papers, the contract stipulated that Contemporary Streetwear would “assume the obligations” of its licensee Icer Brands, also known as Cavi Juniors, if Li & Fung dropped its claims against Icer. After releasing the legal claims, Contemporary Streetwear said it would pay $48,000 for sample charges, take possession of Icer’s inventory worth “at least $94,307.50” and sell it in order to pay the Hong Kong firm, but according to the lawsuit, the defendant never sent Li & Fung any of the proceeds related to the sale of the inventory.
These figures were folded into Thursday’s $1.7 million award, according to court papers.
Freeman’s monetary award follows last year’s order for summary judgment by New York District Court Judge Colleen McMahon, who presided over the case. In her judgment, McMahon cited Contemporary Streetwear’s refusal to cooperate during the discovery phase of the litigation. She then sent the case to Freeman to mull over damages.